The anatomy of a future CEO
Today's essential qualities for tomorrow's Atlanta company leader
Lee Esler, partner, Spencer Stuart
August 1, 2008
sponsored by:
I
n today's business environment of constant change, intense competition and increased
scrutiny of business practices, CEOs are under more pressure to perform than ever. These challenges
also affect the senior executives and managers who will become tomorrow's CEOs.
There are several key attributes and skills shared by enterprise leaders who succeed in today's challenging business setting. These observations were confirmed in our recent survey of more than 120 presidents, GMs, COOs, executive VPs and senior VPs of global technology companies.
While the survey focused on the technology and communications sectors, the findings shed light on the critical competencies and attributes that senior leaders across all industries should possess to merit consideration for a CEO role. They also highlight the skills and traits that organizations must develop in their most promising leaders to remain competitive.
O ne of the essential traits that is growing in importance today is a leader's ability to anticipate market opportunities before anyone else sees them and the discipline and agility to seize them. This foresight ranges from identifying potential market changes before they happen to predicting upcoming hiring needs to prepare for rapid organizational growth.
Not surprisingly, in our survey, 84 percent of executives said they spend the most time on activities meant to drive revenue growth. This often means meeting with top leaders inside the organization to plan for future growth initiatives while also responding to shifting customer demands and marketplace fluctuations. Ninety percent said they are evaluated and compensated on revenue and earnings growth.
Since senior executives tend to be driven to perform, focusing on future growth is nothing new. But greater access to and faster development of digital technologies has significantly increased the number of possible consumer experiences and alternative business models. In turn, that means more competitors, shorter life cycles, new ways of making money and, ultimately, heightened business expectations.
"Growth beyond natural market evolution is not only more critical than ever, but it is also harder than ever to achieve," says Jaime Cohen Szulc, COO of Eastman Kodak Company's consumer digital imaging group.
To grow revenue effectively, today's enterprise leaders must be better at forecasting trends. They must also be quicker to develop new growth opportunities and anticipate which categories and business models will become obsolete.
EXAMPLES: Pete Kight of Checkfree, Tom Noonan of ISS, Boland Jones of Premiere. All are innovators who lead to new ways to doing business.
T he foundation for successful leadership is exceptional communication and interpersonal skills and the ability to influence internal employees and external stakeholders. Mobilizing teams and working effectively with a broad range of partners and stakeholders, from the board to an executive's employees, is fundamental to a company's success.
In our survey, communication skills were identified as the most critical competency for general managers. Eighty percent of enterprise leaders ranked the ability to interact with and influence management and employees across the organization as the most important skill for succeeding in their role.
Look at any of the celebrated Atlanta CEOs, and you'll find that they all had a knack for articulating their vision with passion and garnering widespread employee support. Loyalty and respect also are attained by investing time and energy in developing and coaching top managers for future roles, another hallmark of talented leaders.
Examples: Ted Turner, Bernie Marcus, Arthur Blank.
H aving a strategic mindset was deemed the second most critical competency in our survey. To perform at the highest levels, executives must be able to set a vision, formulate sensible business strategies and drive them throughout the organization. If the marketplace dictates change, executives need to seek input from others, pinpoint how to alter the current strategy, adapt rapidly and communicate the changes to all stakeholders.
"Without leadership and vision, an organization floats," says Malcolm Collins, senior VP of worldwide sales and marketing for NCR. "Leadership is about setting the strategy, constantly reviewing it and adapting it. People want to see you being flexible to changes in the marketplace and the input from bright people in the organization."
The combination of strategic thinking and effective communication is what makes a leader truly outstanding. After all, effective communicators can be great leaders only if they get the strategy right, and sound strategy only works if people understand it and execute it efficiently.
EXAMPLES: Mark Ketchum of Newell Rubbermaid builds a strong brand.
A nother factor influencing a senior executive's chance of reaching an organization's highest rung is their career background. A career path forms a person's unique experiences and skills, shapes industry knowledge and insight, and hones his or her special talents and attributes.
In our survey, we asked leaders about the various functional roles they held prior to moving into a general management role. Sales and marketing emerged as the most common functional route to the enterprise leadership seat. Forty-nine percent of executives spent the majority of their career in sales and marketing before ascending into general management.
This is not surprising, since sales and marketing often are viewed as the "front lines" of an organization. It's where top executives first learn about the value of their products from the customer's perspective and about developing strong, lasting relationships with customers to drive sales revenue. Many of today's CEOs say they still spend significant time with their sales force to cull insights and develop new strategies to achieve revenue growth targets.
Sean Feeney, the Atlanta-based president and CEO of Inovis, observes, "We say that the winds of change are felt first on the faces of your front-line salespeople. You need to be out there with them interpreting what is happening. Having a sales and marketing background allows the CEO to sift and decipher what these groups are telling him or her and assess what needs to be done strategically."
In addition, the performance pressure and individual accountability that sales and marketing roles require make them a superior proving ground for future CEOs. "The skills and experiences that make the difference on the front lines also apply to the corner office on a daily basis. That is, winning against fierce competition and having the resolve to get a deal done," explains Dan Mondor, CEO of Concurrent Computer, whose national headquarters are based in Duluth.
EXAMPLES: Mike Eskew of UPS, John Morgan of ZEP. They lead customer-based teams that feed them information and ideas.
O ne of the newest prerequisites for those who desire the CEO office is the ability to lead and manage across the globe. In a world where Asian and South American markets have attained increasing strategic importance, business leaders must have a global perspective and experience creating and executing international business strategies.
Over the past five years, the percentage of S&P 500 CEOs with international experience has increased from 26 to 34 percent. Among the next generation of leaders in our survey, 51 percent have worked or lived abroad for more than six months, and 46 percent cited an "international mindset" as one of the most important competencies for an enterprise role.
"The key is to take on assignments and opportunities that get you out of your comfort zone. International assignments often accomplish this by giving the rising executive rare work experiences, and more importantly, the confidence that he or she can adapt and thrive in challenging and unusual environments," says Feeney.
"Market understanding and strong relationships are so important to executing strategies and completing deals around the world," says Ron Garriques, president of Dell's global business, who has lived and worked in France, the United Kingdom, Korea, and Argentina. "I don't know how someone with a global job could succeed without these two elements in today's environment."
EXAMPLE: The late Roberto Goizueta, who led the Coca-Cola Company to become one of first U.S. companies to effectively market its famous brand around the world. Coke now owns four of the world's top five nonalcoholic beverage brands; has over 90,500 employees worldwide; reaches more than 200 countries; and serves more than 1.5 billion consumers each day.
R eaching the CEO level also can depend on the strength of the relationship between the senior manager and the board of directors. In fact, more than half of our survey respondents reported having occasional interaction with the board of directors, while 17 percent had frequent interaction and 29 percent had little or no interaction with the board.
Visibility with the board can play a constructive role in advancing a senior executive's compensation and career and in his or her ability to get internal initiatives approved. And if performance is stellar, developing trust and a social rapport with key board members can help to position a star manager as a potential candidate for the CEO position.
EXAMPLE: Gerald Quindlen, president and CEO of Logitech. "I've attended every board meeting since joining the company and made operational presentations to them at the majority of those meetings," he says. "Steady, meaningful visibility is critical to a manager's advancement, and regular contact with enterprise leaders helps the board to vet potential candidates for more senior roles and to sort out those who may not be right for one reason or another."
Today's increasingly complex and ever-changing business world requires the next generation of enterprise leaders to possess an even broader set of skills and competencies than before. Keen foresight in the marketplace, effective communications skills, a strategic mindset, know-how from the front lines, a global perspective and a relationship with the board all help to "fast track" a successful manager or senior executive who master these skills to the highly respected position of enterprise leader or CEO.
While the demand for managers with these modern-day skills and a track record of superior performance is immense, the supply is frustratingly small. One of the main issues is the high turnover in general management positions. Truly valuable managers who possess the diverse skill set necessary to handle progressive business strategies, evolving technologies and emerging markets are highly sought-after and aggressively recruited.
In our survey, almost 50 percent of the respondents have been in their current roles for two years or less. Only one in five has been in his or her position for five or more years. This movement reflects the incredible demand for top talent, and the fact that high-performing managers always are looking for the next opportunity to increase their responsibilities, enhance their skills and improve their compensation.
"Really good people know they are good and get impatient after a short time if the career path for them isn't clear ... Many good folks who have worked for me over the years started to ask 'What's next?' after six months," says Logitech's Gerald Quindlen.
To ensure their organizations have the leaders they need for the future, CEOs and their executive teams need to proactively manage the careers of executives with the most leadership potential and invest in internal succession planning and talent development. Programs should identify high-potential executives early and develop them through stretch assignments, including ones with international responsibility and significant customer and business partner interaction.
"The discipline of constantly evaluating people and organizational structure is essential. Without this discipline, it simply, and quite tragically, slides down in priority," cautions Mondor. "You have to assess the entire organization to ensure the right people structure is there to execute the strategy."
Meanwhile, senior managers with their sights set on the top should look for roles where they can develop these competencies. By doing so, they will have the background, attributes and skills they need to be considered for - and to succeed in a CEO role.
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